In response to this damning evidence of systemic and severe mismanagement at one of America's largest investor owned utilities, the stable of securities analysts covering Con for Wall Street's investment banks and credit rating agencies yawned.

Like Con Edison, Wall Street relies on the same "business as usual" investment analysis of investor-owned utilities that it has relied on for decades.

The logic behind Wall Street's indifference is important to understand. It is also why investors would be wise to rethink the wisdom of Wall Street.

In 2010, investor-owned electric utilities reported $371.5 billion in total energy operating revenues and total market capitalization of $407.3 billion.

Utilities are the only major industry that Wall Street analyzes on a bottoms-up basis. In other words, all that matters for utilities is earning a fair return on prudent investment. Future earnings are a function of assumed capital-investment levels and projected costs of capital. By contrast, competitive position, sales prospects and sales margins are the core metrics for slicing-and-dicing non-utility industries.

Quality of service, changing customer preferences and the threat of disruptive forces are for all practical purposes beyond the scope of traditional utility sector research.

Sell side analysts are forecasting EPS growth between 4% and 7% for regulated utilities. Take that forecast for whatever it is worth, which is not likely to be much.

In February 2009, the New York State Public Service Commission (NYSPSC) commenced a proceeding to examine the prudence of certain CECONY expenditures following the arrests of employees for accepting illegal payments from a construction contractor. Subsequently, additional employees were arrested for accepting illegal payments from materials suppliers and an engineering firm. The arrested employees were terminated by the company and have pled guilty or been convicted. Pursuant to NYSPSC orders, a portion of the company’s revenues (currently, $249 million, $32 million and $6 million on an annual basis for electric, gas and steam service, respectively) is being collected subject to potential refund to customers. The amount of electric revenues collected subject to refund, which was established in a different proceeding, and the amount of gas and steam revenues collected subject to refund were not established as indicative of the company’s potential liability in this proceeding. At March 31, 2013, the company had collected an estimated $1,174 million from customers subject to potential refund in connection with this proceeding. In January 2013, a NYSPSC consultant reported its estimate, with which the company does not agree, of $208 million of overcharges with respect to a substantial portion of the company’s construction expenditures from January 2000 to January 2009. The company is disputing the consultant’s estimate, including its determinations as to overcharges regarding specific construction expenditures it selected to review and its methodology of extrapolating such determinations over a substantial portion of the construction expenditures during this period. The NYSPSC’s consultant has not reviewed the company’s other expenditures. The company and NYSPSC staff anticipate exploring settlement negotiations in this proceeding, the schedule for which may be coordinated with the schedule for consideration of the company’s January 2013 request for new electric, gas and steam rate plans.

At March 31, 2013, the company had a $15 million regulatory liability for refund to customers of amounts recovered from vendors, arrested employees and insurers relating to this matter. The company is unable to estimate the amount, if any, by which any refund required by the NYSPSC may exceed this regulatory liability.